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11/1/2006 8:54 AM
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ADB Proposes $4 Billion in Assistance for Indonesia in 2006-2009

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JAKARTA, INDONESIA - ADB’s new assistance strategy for Indonesia in 2006-2009 will provide about $4 billion in loans and grants in support of the country’s reform program and its efforts to grow the economy to benefit the poor.

“ADB’s new strategy in Indonesia illustrates our confidence in the country’s future,” says ADB Vice-President C. Lawrence Greenwood. “The Government is on the right track with its reform program and ADB stands ready to offer its full support.”

The four-year plan proposes $3.82 billion in loans and about $47.6 million in grants. ADB’s assistance over the four-year period will be focused on infrastructure development, improving the financial sector, supporting decentralization, accelerating the achievement of the Millennium Development Goals (MDGs), and environmental protection.

“This strategy is designed to support the Government’s efforts to address development constraints with realism and determination,” adds Mr. Greenwood. “A key impediment to equitable economic growth and development is corruption, and this program focuses on that issue in all loans and grants.”

The plan proposes extensive resources toward strengthening governance and preventing corruption through the training of local and national government officials, and the strengthening of government institutions. ADB’s comprehensive anti-corruption policy will also be enforced in all loan and grant disbursements under the program.

In 2005, ADB resumed private sector operations in Indonesia and these will be continued under the new program in the years ahead. In August, ADB signed a $350 million private sector loan to help develop the Tangguh Liquefied Natural Gas Project in Irian Jaya Barat province.

Indonesia enjoyed rapid economic growth and a decline in poverty in the early 1990s until the 1997 Asian financial crisis, which exposed serious governance problems in the country. Since the crisis, a focus on debt reduction has lessened spending on economic and social development.

The Government’s Medium-Term Development Plan, which ADB supports, seeks to address these problems and increase the country’s economic growth, create jobs, and improve progress toward the achievement of the MDGs.

“Indonesia is at a critical stage in its pursuit of poverty reduction and economic growth,” says Rajat M. Nag, Director General of ADB’s Southeast Asia Department. “Bold vision, pragmatism, and a commitment to continuous reform should lead to high economic growth by 2009.”

Source: Asian Development Bank

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